COUNCILS HIT PROCUREMENT TARGETS BUT TRANSFORMATION NEEDED TO KEEP IT UP

Councils are set to hit procurement efficiency targets one year ahead of schedule. A report from the DCLG on the ‘National Procurement Strategy For Local Government – Two Years On’ shows that an efficiency saving of 3.1bn pounds due by 2008 is likely to be hit in 2007. The report also predicts that with continued advances in schools, the police and fire, the overall 6.45bn pounds of efficiency gains from the local government sector should be delivered. Local Government procurement decisions in England account for around 40 bn pounds per year.

The report also reveals that while councils are sharpening up their procurement processes, the great majority are not making the transformational changes needed if they are to go on achieving efficiencies in the future. Cultural change is proving much more difficult, but it is essential to sustain efficiency gains in the future. Sharing procurement to cut overheads and lever prices has much cost cutting potential, but the report shows that there is limited enthusiasm for sharing with only one third of councils involved in joint ventures.

Small and medium sized enterprises, in contrast to large companies, are often able to offer better quality and lower prices, as well as having a local base. The National Strategy has been successful in removing many of the barriers to smaller companies bidding for contracts and a Concordat had been devised to help the procurement process and so widen the market place. The 2005 National Strategy target for all councils to sign up to the Concordat for SMEs has not been met. So far, only one quarter of councils have signed up.

The most prolific area for achieving costs savings in the future is the use of eprocurment and it is estimated that full scale adoption across local government could bring an annual saving of 1.1 bn pounds, which includes a staff reduction of 3285 posts. Less than one fifth of councils have so far adopted eprocurement.

Phil Woolas, Minister for Local Government and Community Cohesion said: “As we approach the end of the Strategy period, there are some milestones on which there is yet room for improvement. I urge every authority to assess its position in relation to the targets and make a final push to achieve them”